Solved Exercises on Basic Financial Decisions in Grade 3

Master basic financial decisions: budgeting, saving, spending wisely, comparing prices, and making choices about money through these 5 detailed exercises.

Solution: Exercises 1 to 3
1 Budgeting exercise
Exercise 1
Emma receives $20.00 for her birthday. She decides to save $8.00 and spend the rest. How much can she spend? What percentage is she saving?
Definition:

Budgeting: Planning how to use money by deciding how much to spend, save, or give. It involves making choices about money allocation.

Budgeting method:
  1. Identify the total amount of money available
  2. Decide how much to save
  3. Subtract savings from total to find spending amount
  4. Calculate percentages if needed
Total money
$20.00
Amount to save
$8.00
Amount to spend
$20.00 - $8.00 = $12.00
Step 1: Identify the total amount

Emma received $20.00 for her birthday

Step 2: Identify the savings amount

Emma decides to save $8.00

Step 3: Calculate spending amount

Total - Savings = Spending: $20.00 - $8.00 = $12.00

Step 4: Calculate percentage saved

($8.00 ÷ $20.00) × 100 = 40%

Step 5: State the answer

Emma can spend $12.00 and is saving 40% of her money

Spend: $12.00, Save: 40%
Final answer:

Emma can spend $12.00 and is saving 40% of her birthday money

Applied rules:

• Budget allocation: Total = Savings + Spending

• Percentage calculation: (Part ÷ Whole) × 100

• Planning: Decide priorities before spending

2 Comparing prices
Exercise 2
A toy costs $15.00 at Store A and $12.50 at Store B. If you have $14.00, which store should you shop at? How much money will you have left?
Definition:

Price comparison: Evaluating different prices for the same item to find the best deal. This is an important financial decision skill.

Store A price
$15.00
Store B price
$12.50
Your money
$14.00
Step 1: Compare prices to your money

Store A: $15.00 > $14.00 (can't afford)

Store B: $12.50 < $14.00 (can afford)

Step 2: Make the decision

Shop at Store B since you can afford the toy there

Step 3: Calculate remaining money

$14.00 - $12.50 = $1.50

Step 4: State the answer

Shop at Store B and you'll have $1.50 left

Store B: $1.50 left
Final answer:

Shop at Store B. You will have $1.50 remaining after purchase.

Applied rules:

• Comparison: Compare price with available funds

• Decision making: Choose option within budget

• Change calculation: Subtract purchase from available money

3 Saving decision
Exercise 3
Jake gets $5.00 each week for allowance. He wants to buy a video game that costs $25.00. If he saves all his allowance, how many weeks will it take to save enough money?
Definition:

Saving: Setting aside money over time to reach a financial goal. This requires patience and planning.

Weekly allowance
$5.00
Game cost
$25.00
Weeks needed
$25.00 ÷ $5.00 = 5 weeks
Step 1: Identify weekly savings

Jake saves $5.00 each week

Step 2: Identify the goal amount

The video game costs $25.00

Step 3: Calculate weeks needed

Divide goal by weekly savings: $25.00 ÷ $5.00 = 5 weeks

Step 4: Verify the calculation

$5.00 × 5 weeks = $25.00 ✓

Step 5: State the answer

Jake needs 5 weeks to save enough money

Jake needs 5 weeks
Final answer:

Jake will need 5 weeks to save enough money for the video game.

Applied rules:

• Goal setting: Know how much you need to save

• Time calculation: Divide goal by weekly savings

• Consistency: Regular saving builds wealth over time

Rules and methods, laws,...
Savings Rate = (Amount Saved / Total Income) × 100
Savings Calculation
Budget Rule
Income = Expenses + Savings
Budget equation
Saving Time
Time = Goal ÷ Weekly Savings
Time calculation
Comparison
Affordable if Price ≤ Money Available
Buying decision
Key definitions:

Budgeting: Planning how to use money by deciding how much to spend, save, or give.

Saving: Setting aside money for future use or goals.

Spending: Using money to buy goods or services now.

Allowance: Regular money given to children, usually weekly or monthly.

Price comparison: Looking at different prices to find the best deal.

Financial goal: A target amount of money to save or spend for a specific purpose.

Financial decision-making methodology:
  1. Assess resources: Know how much money you have available
  2. Identify needs/wants: Determine what you want to buy or save for
  3. Compare options: Look for the best value or deal
  4. Make choice: Decide how to allocate your money
  5. Evaluate outcome: Reflect on whether your decision was wise
Tip 1: Always compare prices before buying to get the best deal.
Tip 2: Save a portion of any money you receive (like allowance or gifts).
Tip 3: Set financial goals to motivate saving and wise spending.
Tip 4: Ask yourself if you really need an item before buying it.
Common errors: Spending all money without saving, not comparing prices, making impulsive purchases, not setting financial goals.
Real-world applications: Shopping wisely, saving for toys/games, budgeting allowance, making choices between wants and needs, planning for special purchases.
Financial principles to know:

• Income = Expenses + Savings (budget equation)

• Compare prices to find the best value

• Save regularly to build money over time

• Set goals to guide your financial decisions

• Differentiate between wants and needs

• Plan before spending to avoid overspending

Solution: Exercises 4 to 5
4 Wants vs Needs
Exercise 4
Lily has $20.00. She needs new shoes for school that cost $18.00, but she also wants a new toy that costs $12.00. What should she prioritize? How much more money does she need for both?
Definition:

Wants vs Needs: Needs are things you must have to live safely and healthily (food, shelter, clothing for school). Wants are things you would like to have but don't need.

Total money
$20.00
Shoes (need)
$18.00
Toy (want)
$12.00
Total needed
$18.00 + $12.00 = $30.00
Step 1: Identify needs vs wants

Shoes are a need (required for school), toy is a want (nice to have)

Step 2: Prioritize the need

Buy the shoes first since they are necessary

Step 3: Calculate remaining money after need

$20.00 - $18.00 = $2.00 remaining

Step 4: Calculate total needed for both

$18.00 + $12.00 = $30.00

Step 5: Calculate shortfall

$30.00 - $20.00 = $10.00 more needed

Step 6: State the recommendation

Buy shoes now, save for toy later

Buy shoes first, need $10.00 more
Final answer:

Lily should buy the shoes first (need), then save for the toy (want). She needs $10.00 more for both.

Applied rules:

• Priority: Needs come before wants

• Allocation: Spend money on necessities first

• Planning: Save for wants over time

5 Multi-decision problem
Exercise 5
Max receives $30.00 for his birthday. He decides to save 30% for college, spend 50% on games, and give 20% to charity. How much money goes to each category? What is the benefit of this approach?
Definition:

Money allocation: Distributing money across different categories (saving, spending, giving) based on priorities and percentages.

Total money
$30.00
College (30%)
$30.00 × 0.30 = $9.00
Games (50%)
$30.00 × 0.50 = $15.00
Charity (20%)
$30.00 × 0.20 = $6.00
Step 1: Calculate 30% for college savings

$30.00 × 0.30 = $9.00

Step 2: Calculate 50% for games

$30.00 × 0.50 = $15.00

Step 3: Calculate 20% for charity

$30.00 × 0.20 = $6.00

Step 4: Verify the total allocation

$9.00 + $15.00 + $6.00 = $30.00 ✓

Step 5: Identify the benefits

This approach ensures balanced financial habits: saving for future, enjoying present, helping others

Step 6: State the answer

College: $9.00, Games: $15.00, Charity: $6.00

College: $9.00, Games: $15.00, Charity: $6.00
Final answer:

Max allocates: $9.00 to college savings, $15.00 to games, $6.00 to charity. This approach develops good financial habits early.

Applied rules:

• Percentage calculation: Convert percentage to decimal and multiply

• Balance: Include saving, spending, and giving in allocation

• Verification: Ensure percentages add up to 100%

Complete Summary: Basic Financial Decisions
Savings Rate = (Amount Saved / Total Income) × 100
Savings Calculation
Key definitions:

Budgeting: Planning how to use money by deciding how much to spend, save, or give. It involves tracking income and expenses to make informed decisions.

Saving: Setting aside money for future use or goals. This requires discipline and planning to achieve financial objectives.

Spending: Using money to buy goods or services now. Wise spending involves comparing prices and making thoughtful choices.

Needs: Essential items required for basic living (food, shelter, clothing, education).

Wants: Desired items that are not essential (toys, entertainment, luxury items).

Allowance: Regular money given to children, usually weekly or monthly, to teach money management skills.

Price comparison: Looking at different prices to find the best deal and maximize value for money spent.

Financial goal: A target amount of money to save or spend for a specific purpose (buying something special, building an emergency fund).

Complete financial decision-making methodology:
  1. Assess resources: Know how much money you have available to make decisions
  2. Identify needs vs wants: Determine what you need versus what you want
  3. Set priorities: Rank your needs and wants based on importance
  4. Compare options: Look for the best value or deal available
  5. Make choice: Decide how to allocate your money based on priorities
  6. Execute plan: Carry out your financial decision
  7. Evaluate outcome: Reflect on whether your decision was wise and adjust for next time
Tip 1: Always compare prices before buying to ensure you're getting the best value for your money.
Tip 2: Save a portion of any money you receive (allowance, gifts, earnings) to build good habits.
Tip 3: Set specific financial goals to motivate saving and guide spending decisions.
Tip 4: Before buying, ask yourself if you really need the item or if it's just something you want.
Tip 5: Create a simple budget by dividing your money into categories: save, spend, share.
Common errors: Spending all money without saving, not comparing prices, making impulsive purchases, confusing wants with needs, not setting financial goals, overspending beyond available funds.
Real-world applications: Shopping wisely, budgeting allowance, saving for special purchases, making choices between wants and needs, planning for special events, sharing with others through charitable giving.
Key financial principles:

• Budget equation: Income = Expenses + Savings + Giving

• Compare prices to find the best value

• Save regularly to build money over time

• Set specific, achievable financial goals

• Prioritize needs over wants when money is limited

• Plan before spending to avoid overspending

• Percentage allocation: Divide money into categories (e.g., 50% spending, 30% saving, 20% giving)

• Verify that allocations add up to 100% of available money

Visual Guide to Basic Financial Decisions

💰
Budget Allocation

Income = Expenses + Savings + Giving

Example: $20 = $12 (spend) + $6 (save) + $2 (give)

Track your money flow

Plan before you spend

Price Comparison

Compare before buying

Store A: $15.00

Store B: $12.50

Save $2.50 by choosing Store B

Get best value for money

Saving Strategy

Set a goal

Save regularly

Time = Goal ÷ Weekly Savings

Example: $30 goal ÷ $5/week = 6 weeks

Patience pays off

Wants vs Needs

Needs: Must-have items

(Food, clothing, school supplies)

Wants: Nice-to-have items

(Toys, games, treats)

Prioritize needs first

Questions & Answers

Question: I always want to buy toys when I get money, but my parents say I should save some. How do I decide what to do?

Answer: Here's a good approach to balance wants and needs:

  • Set aside a percentage: Maybe save 20-30% of any money you get
  • Consider your wants: Is the toy something you'll enjoy for a long time?
  • Compare prices: Look for the best deal if you decide to buy
  • Set goals: If it's expensive, save up for it over time

Example: If you get $10, save $2-$3 and spend $7-$8 on something you want. This way you enjoy some money now and build good habits for the future!

Remember: Saving doesn't mean never buying fun things - it means making thoughtful choices about money.

Question: How can I tell the difference between a "need" and a "want"? Sometimes I think I need something, but my parents say it's just something I want.

Answer: Here's a simple way to tell the difference:

  • Needs: Things you must have to stay healthy and safe (food, water, clothes, shelter, school supplies)
  • Wants: Things you would like to have but don't need to survive (toys, games, treats, special clothes)
  • Ask yourself: "Would I still be okay without this?" If yes, it's likely a want

Example: You need clothes to wear to school, but you want the designer brand specifically.

You need basic school supplies, but you want the fancy decorated notebooks.

Needs come first when money is limited, then you can use remaining money for wants.

Question: When I go shopping with my family, there are so many things I want to buy. How do I make good choices about what to buy?

Answer: Here's a smart approach to shopping:

  • Make a list: Before going shopping, decide what you really need
  • Stick to your budget: Only consider items within your money limit
  • Compare prices: Look for the best deal for the quality you want
  • Wait before buying: If you see something new, wait a day to see if you still want it
  • Ask questions: Why do you want this? Do you have something similar?

Before buying anything, ask yourself: "Do I need this? Can I afford this? Is this the best use of my money right now?"

This helps you make thoughtful decisions instead of impulse purchases!